External Factors of Decision-Making Process - Samsung - Case Study Example

Consumer behavior Name Institution Course Lecturer Date Executive summary Consumer purchasing behavior is often influenced by factors that are outside the consumer control but have direct or indirect impact on manner of live and consumption of products. These factors are referred to as external factors. A consumer is faced with many external influences, including an individual’s culture, subculture, social class, opinion leaders, innovation diffusion, public, policy and consumer protection that a consumer has relations and references to. Marketers and organization owners refer these factors as external influences because the foundation of the influence is from the outside of a consumer rather than the internal. Currently, consumers have faced with a collection of products for selection, and competition is stiff among companies and organizations. For this reason understanding consumer behavior is fundamental to the growth and development of a company. Both the internal and external factors are connected and work jointly to assist the consumer in decision making. Consumers are therefore motivated to purchase products depending on different influences and needs and this is revealed through the Maslow’s hierarchy of needs’ theory and Trio Needs theory. The elements of perception in Consumer behavior include, motives, attitudes, and needs consumer purchasing decision, learning, family, class perception, personality and economic play a vital role in molding a consumer behavior. Finally behavioral and cognitive influences and attitude towards a product or model were used to explain consumer acquiring, learning and attitude respectively. Through this paper, it is patent that external factors play a trivial role in influencing a consumer decision making process. Table of Contents Executive summary 2 Table of Contents 3 1.0 Introduction 4 2.0 Family 5 2.0 Social class 6 3.0 Culture 7 3.1 Sub cultural 9 4.0 Opinion leaders 10 5.0 Diffusion of innovations 11 6.0 Public policy 12 7.0 Consumer protection 14 References 17 1.0 Introduction A reference group is a group that consumers associate with or compare themselves with. They help the consumer to develop values and attitudes and that guide and influence the consumers’ behaviors. Consumers look up to reference groups to help them make purchasing decisions and hence they have profound influence on the behavior of the consumer. Everyone behaves in a certain way on the basis of the reference groups that they belong to. Consumers often modify their behaviors so that they coincide with their group norms (Solomon et al, 2009). Communication by reference groups is through opinion leaders. The opinion leaders influence what the other people do, how they act and what they buy. Solomon et al, (2009) observed that, there are two broad categories of reference groups. The first group is the normative reference groups. These influences the consumers’ general behavior and values. Consumers’, family and friends are the best example of normative reference groups. The friends are among the most influential reference groups who influence the consumers’ behavior. This is because they have direct contact to the consumer. In the case of Samsung, the family of the consumer will have great influence on the decision. The family members will influence the consumer greatly. For example, if the family members are users of Samsung phones, they will influence the consumer to purchase a Samsung phone too. Friends of the consumers will also influence the decision of the consumer to purchase Samsung phones. The second group is the comparative reference groups. These groups serve as benchmarks for specific behavior and attitude. For example, a group of neighboring families share common habits and attitudes. Samsung is a widely used phone brand. If the neighbors of the consumers prefer Samsung to the other brands of phones, the neighbors will influence the decision of the consumer greatly as they will encourage the consumers to go for their preferences which is Samsung Solomon et al, (2009) stated that, there are also indirect reference groups. These are people with whom a person identifies, admires and associates with but they do not have face to face interactions. Examples of indirect reference groups are TV personalities and movies stars. Companies choose the reference groups that they feel will match their target market and make them purchase the products. The indirect reference groups are used by marketers to endorse the products. Samsung also uses reference groups to endorse their brand. For example, they can use celebrities to endorse their brand during social events. The leaders of Samsung Company are also used to endorse the brand. The indirect reference groups will endorse the brand through use of statements regarding the product and those consumers who like the group will purchase the products from Samsung. The reference group may disapprove the product and those who associate with the group will be compelled to avoid purchasing the product 2.0 Family A family refers to more than two people who are related to each other by blood, adoption or by virtual of marriage and live together in a similar home. A family has great influence to the purchasing behavior of a consumer. It is an important factor as it helps to shape the behaviors and attitudes of an individual. Parents are of great influence as they help children to develop religious beliefs, political choices, consumer preferences and lifestyle choices. Most people are who they are because of their parents (Sirdeshmukh et al 2002). . A family has many roles in the consumers’ decision making process. Family members are decision makers. Decision makers of a purchase can be the husband, wife or children. However, the decisions are sometimes made in collaboration. The decision maker changes with the size of the purchase and the type of purchase (Sirdeshmukh et al 2002). In a family, decisions can be jointed among the family members –father, mother and children. For example, when making decision to buy a phone for a child in the family; the decision can also be made by a single member of the family. When deciding to purchase a Samsung phone, the decision maker is more likely to be influenced by the type of phone used by family members if the Samsung phone is the most common they are most likely to purchase the Samsung phone. Family members also influence each other; as they provide information about various products or services to the other family members. In of buying a phone, the family members will give the information about the phone and whether it is good for the consumer. This will help the consumer to make the final decision on whether to purchase the Smsang or LG phone. Family members are also users, that is, they use a particular product. For example, the members of the family may be users of Samsung phones. When the consumer will be making the decision on which phone to purchase, the family members will influence the consumer to buy a Samsung phone that is most common to them. 2.0 Social class A social class is a group of people belonging to a similar class based on wealth, income, education or power class. According to Hawknis et al, (2011), there are different social classes including the high (wealthy), middle and low (poor) .A consumers social class influences their purchasing power and behavior. This is because people in the same class in a society tend to have common attitude and preferences. A social class therefore may influence the manner in which a consumer behaves towards a certain product. The level of consumer income in certain class influences the kind of phone that is common among different social class. For example, the high class may opt for LG phones because they associate it with wealth while the middle and low class prefer Samsung phones because of its cost. In marketing therefore the Samsung company must identify and design its products to impress the different social classes in a society. The marketer should understand the various dynamics of social classes and aim at meeting their expectations in terms of quality and pricing (Hawknis et al, 2011). An example is a woman working as a financial manager and another woman working as a secretary .These two women belong to different social classes if they both prefer Samsung products, the products must be tailored to suit the two different classes of workers. Maslow’s hierarchy of needs observes that human being have different needs and priorities according to the social classes and status. Samsung therefore must rebrand and renovate its products to influence and rejuvenate self esteem among a hierarchy of its consumers. Consequently, this will help to identify customers and position their products and redesign marketing strategies across the different social classes (Hawknis et al, 2011). As a result Samsung consumer power will increase thus increasing production and competitive advantage. 3.0 Culture Consumer behavior is also determined by culture. Culture is defined by Schumann, (2009) as, the attitude, values, norms and beliefs of people or society. The culture of a person is developed and grows depending on these cultural factors. Culture thus helps consumers to develop their opinion and attitude towards specific products or services. These shape the consumer behavior of consumer’s behavior towards a product. In buying a phone, culture influences the type of phone that a consumer buys depending on opinions and attitude associated with the phone. Some consumers will buy a Samsung phone because they belief that it is long lasting, this belief help to develop a positive attitude and thus they choose Samsung phone. Culture is also developed by family members and friends (Schumann, 2009). They help to develop the opinion, belief and attitude of a consumer towards a product. This influences their purchase habits by influencing the choice of product. The marketing and marketing strategy also influences the culture of consumers. This is through use of advertisements that form that form the basis for consumer opinions and attitudes towards a product. Culture is very dynamic and evolves continuously. It is therefore vital for marketers to monitor the changes in culture and develop its products to satisfy the existing market. Culture in customer behavior is the acquire and learnt beliefs, customs and values that regulate the behavior of consumers towards a product .The beliefs and values act as a direction towards a consumer’s well ingrained yet natural determiner of consumer behavior (Kacen & Lee, 2002). Children and young adults acquire culture from their environment either formally through education or informally. The use of advertisement as a market strategy enhances informal learning of culture as it provides a platform for communication to people in society thereby influencing their values and belief towards a specific product. Highlighting the quality, health and pricing benefits associated with Samsung consumers are attracted to the product (Schumann, 2009). Since consumers have an ability to change their culture and acquire or learn new one, marketers of Samsung should promote tangible and quality products to improve and persuade consumer perception and image of the product. This assists in creation and development of positive attitude, values and beliefs among consumer thus promoting a Samsung purchasing culture among consumers belonging to different cultural backgrounds. Marketers therefore have a task of studying differences and changes in consumer culture and values in order to provide an effective platform for segmentation and target and the consumer market. Additionally, marketers of Samsung phones need ensure that the product remains relevant to the culture by reinforcing its functions and purpose among a variety of cultures. 3.1 Sub cultural The sub culture of a consumer significally influences their buying habits (Kacen & Lee, (2002) culture is divided into sub cultures. These are smaller cultural groups with common opinions, values, attitudes and beliefs. Such groups include religious, geographical, nationality and racial groups. These sub groups influence each other opinions and attitude in deciding on a Samsung phone. They influence the brand that is highly popular among their consumers depending on their perception towards different Samsung phone brands. Samsung market is therefore characterized by different subcultures that influence consumer purchasing power. The Samsung phone is promoted and marketed among the different subcultures using the company’s brand name which gives an identity to a consumer. The product is therefore positioned and designed in a manner that influences perception of a consumer belonging to different subcultures towards a product. To attain this, a marketer is recommended to conduct a research on different values, attitude, beliefs and opinions towards Samsung phone among different sub cultures that influence consumer behavior. Sumsung phone user should be motivated to purchase the product depending on their different needs amongst the varied sub cultures .Consumers feel proud to be associated with the phone company depending on their subculture this implies that motivational sub cultural needs are varied and influences consumer habits in purchasing a product (Kacen & Lee, 2002). 4.0 Opinion leaders The consumers’ decisions to purchase are influenced by the kind of people or groups. They seek help from opinion leaders. An opinion leader is someone who is more knowledgeable on a certain subject. Therefore, an opinion leader is a person whom consumers rely on for guidance in making decisions on purchases. Opinion leaders can influence the perception of a product or a service to the consumers. Consumer’s friends can be opinion leaders (Verhoef, 2003). Friends give information, advice and help the consumer to make decisions. When making decision to buy a phone, friends will give information about a Samsung phone which will help the consumer to evaluate and decide whether to purchase it. Friends will also give the consumer advice on whether the phone is good enough. This will influence the consumer’s final decision. There are some products which have opinion leaders who are professionals, that is, people who have expertise in a certain area. Examples of opinion leaders are physicians and stoke brokers. Celebrities are also opinion leaders. Many consumers think that celebrities have knowledge about a product. Samsung can use celebrities to endorse their brands. By doing this, they give clout, that is, influence and effectiveness to the brand. The marketers have to be able to attract the celebrities. To do this, marketers organize shows (Verhoef, 2003). Many consumers buy certain products because they want to be like the celebrity or because they like the celebrity. By the use of celebrities to endorse their brand, Samsung is able to attract more sales because many consumers will purchase Samsung phones due to liking or wanting to be like the celebrity. Samsung can also use its leaders as opinion leaders because as the face of the company they have more information about the brand than the celebrities. This will help to attract more customers for their brand. Opinion leaders will have great influence on the success of the Samsung brand of products. 5.0 Diffusion of innovations This is a theory of events used to explain the manner in which an innovation is channeled to a certain members of a society. The diffusion of innovation is manifested by the adoption of new innovations and technology among a group of consumers. To influence consumers and diffuse innovation among a group of consumers certain elements must be applied. These elements include knowledge, persuasion, decision, implementation and confirmation of a product. Wu & Wang (2005) observed that, innovation diffusion is a process that influences the spread and adoption of new products. The process is driven by social and external factors. The technology and innovation adopted by Samsung phone has to meet consumer needs and values. For example, the improvement on speed internet in a certain Samsung phone can impact on its diffusion among different consumer groups. Marketers need therefore to conduct comprehensive research on consumer needs and behavior to determine the required technology and innovation. Marketing helps to develop the concept of innovation as t helps in designing and positioning specific makes of sumsang phones in a certain perception in order to meet the different consumer needs .The marketing process also helps in determining diffusion rate and pattern (Wu & Wang 2005). This because, marketing impacts on communication of new innovation in the mass market. The innovations should be continuous and proper marketing should be done to avoid complexities in diffusion of innovations. The Samsung Phone Company may innovate arrange of consumer products to meet consumer social, cultural and economic needs in a society. This because consumers purchase product in order to satisfy their needs. Some consumers as Trio needs observes, develop a sense of success by owning a product. Such consumers are proud to be associated with Samsung as a company’s brand name and become loyal and interested in the brand (Wu & Wang 2005). The Samsung phone innovators have a role of improving the phones technology to improve perception of the product among a range of consumers. It strategizes its Samsung phones to include a variety and unique products. This will improve the image of the product to consumer thus enhancing their value for the Samsung products thereby positively influencing consumer purchasing power. Therefore the innovation aims at improving image, satisfaction and value of product to consumer to a product thus increasing their purchasing power resulting to increased production and competition advantage. 6.0 Public policy Public policy is the written procedures, policies, guidelines and standards. They form a basis for managing production, marketing and promotion of products in a company. Companies and governments formulate these policies and regulations in an effort to ensure consumer and product safety. These policies form the framework for selection and implementation of a product management and control measures (Howells & Weatherill, 2005). These public policies influence consumer behavior. Most public policies are aimed at improving consumer behavior. Marketing is influenced by consumer behavior towards a public policy product. Samsung phone consumer behavior when well analyzed develops and improves good public policies as it impacts on consumer decision making process and behavior. The marketing process should consider public policies and use them to rejuvenate consumer perception toward Samsung phones. Marketers develop public policies to influence consumer buying habits by promoting policies that ensure consumer satisfaction. This may be through communication of the quality and healthy factors associated with the Samsung product .The public policies can hence be used by a company to improve consumer perception thus marketing and promoting the product. The public policies aim at protecting the rights and health of consumers thus prompting Samsung phone companies to produce and innovate phones that are not harmful to consumers. Howells & Weatherill, (2005) stated that, public policy identifies consumer values, right and health matters and build up a set of regulations that govern Samsung phone market and management. The policies influence a consumer attitude towards a product. Some consumers buy Samsung phones due to public policies associated with the product. Such policies ensure quality, security, easy to use and favorable price. Consumer behavior is therefore influenced by public policies that form a platform for comparison of a range of other competitive products. In deed public policies influences the consumer behavior as consumers use them to rate the product as either high or low quality ; healthy or unhealthy thus impacting on their attitude and perception. In turn this influences their buying power depending on their evaluation of the product in relation with public policies. The consumer reaction towards a policy should act as an indicator to for innovation and designing of public policies. The public policy therefore forms a framework for innovation and consumer behavior (Howells & Weatherill, 2005). It therefore should consider, the nature of cultural, social and economic factors to impact on the process of decision making among different segments of consumers. Public policies influences consumer behavior. They determine the attitude, values and opinions of consumers towards Samsung phones. The public policy educates and informs the consumers about Samsung product. It gives vital information about the different Samsung brands these positions the products value to a consumer (Howells & Weatherill, 2005). It is therefore necessary for accompany to adapt and implement public policies in its innovation processes to ensure increased and improved consumer insights to a product. Consequently, this makes it easy to market a product as well as ensuring competitive advantage. 7.0 Consumer protection Consumer protection refers to security measures that a consumer is awarded by a company or organization. The security measures are aimed to protect a consumer while purchasing and using a product. Samsung Phone Company may influence consumer behavior by adapting ethical consumer behavior. This can be through protecting consumers from impersonated and counterfeit products. Consumers and users of Samsung phones are likely to be influenced by protection and availability of genuine and original products (Howells & Weatherill, 2005). Consumers get phones that have not been interfered with by illegitimate brokers and companies. This can be best practiced by use of such offers as warranty which gives a customer to report if a phone is faulty to acquire a refund. This form of protection safeguards a consumer’s preference and influences their attitude towards the Samsung phone. As a result, there is increase in the number of consumers thereby, increasing production and competitive advantage over other types of phones for example, LG phones. Consumer protection increases a customer’s loyalty. This is because consumers tend to associate themselves with products that are well protected. Samsung phone offering well labeled and packaged phones influences consumer behavior. This is because well package and labeled phone packages serves to improve consumer image, perception and attitude (Howells et al, (2010). Thus, attracting consumers to a product; consequently, positively influencing the decision making of a consumer. In summary, consumer behavior and power to purchase the Samsung phone is greatly influenced by external factors including family, social class, culture, subculture, opinion leaders, innovation diffusion, public policy and consumer protection. A consumer has to venture through a series decision-making process which involves consultation, observation, discussion and debates for information from their reference group before making a decision. Customer behavior is influenced by the gap that exists between a product or a service and its perception by different reference groups. Consumer behavior towards a Samsung phone is therefore recognizable among different consumer groups by the value they accord a product. The behavior tends to create a sense of influence among customers who purchases the product. At times, this behavior is determined by the way in which sellers develop reputation of the product among its reliable customers by delivering the required or more than-expected services on time. The habits are developed by marketers by identifying the target market in mind and particularly focusing on active consumers. The Samsung unique characteristics appeals to a demographic group of successful individuals, well-educated, single or raising families or groups. Customer’s behavior is focused on individual group of a consumer that may be status-oriented and likes to be associated with high-quality services or products. In turn, the customers are likely to part with a premium price for certain samsung brand. The marketer hence targets, innovates and develops brands differently according to, consumer’s reference group or household with higher incomes. 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